Thursday 25 June 2009


Patri Friedman will think less of you if you drive a motorbike: they're just too risky. He cites stats of fatality rates twenty times those of automobiles, corrected for miles driven.

But those numbers don't correct for agent type. What he really needs, and what I don't think exists, is data on relative fatality rates for risk-averse drivers in both types of vehicles. I'm sure motorcycles are still riskier, but twenty-times riskier, correcting for agent type?

Specify that there's an underlying distribution of risk-aversion running from highly risk averse to highly risk/thrill seeking. And, suppose agents sort across vehicle class by underlying risk aversion. So the most risk-averse agents buy a Volvo, the median agent buys a Toyota, and the most risk-preferring agent buys a motorbike. If we then find that motorcycles have higher fatality rates than cars, I don't know what portion of the difference comes from agent heterogeneity and how much comes from motorcycles being more dangerous.

How could you tell? Well, one way would be to check the proportion of motorcycle riders with health insurance as compared to car drivers. David Hemenway's propitious selection story suggests that risk preference is correlated across different types of behaviour, so adverse selection stories in insurance are overstated: he finds that motorcycle riders in accidents without helmets are more likely to be uninsured than those who wore helmets. In other words, folks who like risk take more risks. So, get some measure of risk preference derived from health insurance status (or life insurance, or credit rating, etc), use it in probit estimation for the likelihood of being in accident, then adjust the motorcycle stats for underlying agent type. It would be a big job, and I'm not going to do it, but it would be a cool paper for somebody who had ready access to the data.

So, to the extent that Patri is right to cast aspersions on motorcycle riders, it's because it might be an efficient signal of underlying agent type. But Patri, if you already have all kinds of other signals about somebody's underlying type, perhaps don't downgrade an otherwise risk-averse person quite as much as you otherwise would: it's highly unlikely that they're facing a 20X average risk.


  1. As a risk-averse motorcyclist, I found your post quite amusing. I'm cognizant of the risk of riding a bike, which is why I find it all the more unbearable to ride here in Florida.

    The speed limits are very high, the traffic density is very high, the drivers are either old, or drunk, or careless. These risk factors produce the desire for drivers to "armor up" with the biggest heaviest vehicle possible.

    As a motorcyclist, our protection comes from the adoption of helmets, leathers, spine protectors, etc. The problem with personal protective equipment is that it runs into the other problem of Florida, the oppressive heat. Wearing a helmet and leathers in 37 degree heat with 95% humidity is a recipe for heat exhaustion.

    While one is in motion, the heat is bearable, but Florida outlaws filtering. So at a red light, bikers are forced to wait at the end of a line of cars, roasting and waiting to be rear ended by a careless driver, rather than safely and slowly filtering to the intersection.

    The combination of all of these factors leads to a strong agent factor, with only the most risk-seeking riders choosing to ride. Those folks tend to wear NO helmets, NO jackets, throw a few cold ones back, then hop on their clumsy cruiser or hyper maneuverable superbike. That their fatality rate is ONLY 20x higher than drivers is surely a miracle.

  2. Awesome. If insurance rates for motorcycles are not much higher in Florida than, say, Ohio, adjusted relative to insurance rates for cars, that suggests that the riders you're talking about aren't buying insurance. 'Cause if they were, rates would go up considerably. Would be an interesting test. Would need actual data on rates of helmet/protective gear wearing though rather than anecdote.